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Forgent vs. Eaton: Which Data Center Power Stock Is the Better Buy?
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Key Takeaways
Forgent is guiding to roughly 95% EPS growth in fiscal 2027, well above Eaton's 12% expected for 2026.
Eaton's Electrical backlog rose 43%, while data center revenues in Electrical Americas surged 65% in Q2.
FPS' backlog covers over 90% of fiscal 2027 revenue guidance, with data center sales up 161% in fiscal 2026.
The AI data center boom has put electrical equipment makers in the spotlight. Eaton Corporation (ETN - Free Report) and Forgent Power Solutions (FPS - Free Report) both supply power equipment to data centers and the grid, and they compete in areas such as transformers and modular power systems. Eaton is the larger, more diversified company, while Forgent is a newer, faster-growing specialist. Both stocks have slipped over the past six months, with Eaton down 4.4% and Forgent down 7.4%. So, which one is the better buy now? Let’s compare the two.
Image Source: Zacks Investment Research
The Case for Eaton
Eaton’s appeal starts with demand it can already see. Its total Electrical backlog at the end of June was 43% above a year earlier, and data-center revenues in Electrical Americas rose about 65% in the second quarter. Management also says the total U.S. data-center backlog has reached 307 gigawatts, roughly 15 years of work at 2025 build rates, up from 12 years in its prior update. Most of it is expected to turn into deliveries in 2028 and beyond, which gives the company a long runway.
Eaton is spending to meet that demand. It plans to invest about $3 billion in research and development over the next decade and is putting more than $242 million into a new plant in North Little Rock, AR. More than $1 billion in capacity investments and about two dozen Electrical Americas projects should add revenues as the new facilities come online.
Acquisitions are widening the portfolio. Eaton has agreed to buy COL Group from Oaktree for €810 million ($923 million), which would add medium-voltage technology and manufacturing capacity in Europe for data-center and utility customers. Earlier deals, including Fibrebond, Resilient Power, Ultra PCS and Boyd Thermal, have added capabilities in modular power, thermal management and aerospace.
Eaton is also less tied to a single theme. Beyond AI data centers, it serves utilities, commercial aerospace, defense and industrial customers, which cushions it if one market slows. The planned separation of its Mobility business, through a deal with Dana expected to close in the first quarter of 2027, should sharpen its focus on higher-growth Electrical and Aerospace operations.
For 2026, management expects organic growth of 11-13%, segment margins of 24.1-24.5% and adjusted earnings per share of $13.40-$13.60. The midpoint of the earnings range implies 12% growth from 2025.
Take a look at how Eaton’s EPS estimates have moved over the past 90 days.
Image Source: Zacks Investment Research
The Case for Forgent
Forgent’s strongest card is the business it has already booked. It ended fiscal 2026 with a record $3 billion backlog, up 256% from a year earlier and more than double its annual revenues. Management says the backlog covers more than 90% of its fiscal 2027 revenue guidance of $2.4-$2.6 billion, which implies 76% growth at the midpoint. With most of next year’s sales under firm orders, demand risk is low.
AI data centers are the main source of that demand. Forgent’s data-center revenues grew 161% in fiscal 2026, well ahead of estimated market growth of 37%. It has won its first direct order from a frontier AI lab and signed a master services agreement with a hyperscaler, which could lead to larger projects. Its Powertrain Solutions unit sells integrated, factory-built power systems instead of separate components, a good fit as data-center builders look to speed up construction. The unit’s revenues rose 187% to $147 million in the last reported quarter and made up about 40% of year-end backlog.
Forgent is also taking market share. Grid revenues grew 69% against estimated market growth of 10%, and industrial and other revenues rose 11% against 8%. Vertical integration, customization and short lead times help it win orders. Continued share gains could keep growth going even if industry demand cools.
Profitability is improving alongside growth. Adjusted EBITDA rose 91% to $323 million in fiscal 2026, with the margin at 22.7%. For fiscal 2027, management guides to adjusted EBITDA of $575-$625 million, up 86% at the midpoint, and adjusted EPS of $1.26-$1.40, up 95%.
Cash flow and capacity should fund the next phase. Operating cash flow rose to $109 million from $45 million and is expected to top $300 million in fiscal 2027. A planned Tijuana facility should lift revenue capacity to about $5.8 billion.
Take a look at how Forgent’s EPS estimates have moved over the past 90 days.
Image Source: Zacks Investment Research
Our Take: Forgent Has the Edge
Both stocks have strong cases, and Eaton remains a solid buy, backed by diversification and a deep data-center pipeline. But Forgent offers more upside. It is guiding to roughly 95% EPS growth in fiscal 2027 against about 12% for Eaton in 2026, and a $3 billion backlog already covers most of next year’s revenues. Forgent also sports a Zacks Rank #1 (Strong Buy), a notch above Eaton’s Zacks Rank #2 (Buy). Execution is the main risk, but with faster growth and clearer visibility, Forgent is the pick. You can see the complete list of today’s Zacks #1 Rank stocks here.
View the Zacks #1 Rank List
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Forgent vs. Eaton: Which Data Center Power Stock Is the Better Buy?
Key Takeaways
The AI data center boom has put electrical equipment makers in the spotlight. Eaton Corporation (ETN - Free Report) and Forgent Power Solutions (FPS - Free Report) both supply power equipment to data centers and the grid, and they compete in areas such as transformers and modular power systems. Eaton is the larger, more diversified company, while Forgent is a newer, faster-growing specialist. Both stocks have slipped over the past six months, with Eaton down 4.4% and Forgent down 7.4%. So, which one is the better buy now? Let’s compare the two.
The Case for Eaton
Eaton’s appeal starts with demand it can already see. Its total Electrical backlog at the end of June was 43% above a year earlier, and data-center revenues in Electrical Americas rose about 65% in the second quarter. Management also says the total U.S. data-center backlog has reached 307 gigawatts, roughly 15 years of work at 2025 build rates, up from 12 years in its prior update. Most of it is expected to turn into deliveries in 2028 and beyond, which gives the company a long runway.
Eaton is spending to meet that demand. It plans to invest about $3 billion in research and development over the next decade and is putting more than $242 million into a new plant in North Little Rock, AR. More than $1 billion in capacity investments and about two dozen Electrical Americas projects should add revenues as the new facilities come online.
Acquisitions are widening the portfolio. Eaton has agreed to buy COL Group from Oaktree for €810 million ($923 million), which would add medium-voltage technology and manufacturing capacity in Europe for data-center and utility customers. Earlier deals, including Fibrebond, Resilient Power, Ultra PCS and Boyd Thermal, have added capabilities in modular power, thermal management and aerospace.
Eaton is also less tied to a single theme. Beyond AI data centers, it serves utilities, commercial aerospace, defense and industrial customers, which cushions it if one market slows. The planned separation of its Mobility business, through a deal with Dana expected to close in the first quarter of 2027, should sharpen its focus on higher-growth Electrical and Aerospace operations.
For 2026, management expects organic growth of 11-13%, segment margins of 24.1-24.5% and adjusted earnings per share of $13.40-$13.60. The midpoint of the earnings range implies 12% growth from 2025.
Take a look at how Eaton’s EPS estimates have moved over the past 90 days.
The Case for Forgent
Forgent’s strongest card is the business it has already booked. It ended fiscal 2026 with a record $3 billion backlog, up 256% from a year earlier and more than double its annual revenues. Management says the backlog covers more than 90% of its fiscal 2027 revenue guidance of $2.4-$2.6 billion, which implies 76% growth at the midpoint. With most of next year’s sales under firm orders, demand risk is low.
AI data centers are the main source of that demand. Forgent’s data-center revenues grew 161% in fiscal 2026, well ahead of estimated market growth of 37%. It has won its first direct order from a frontier AI lab and signed a master services agreement with a hyperscaler, which could lead to larger projects. Its Powertrain Solutions unit sells integrated, factory-built power systems instead of separate components, a good fit as data-center builders look to speed up construction. The unit’s revenues rose 187% to $147 million in the last reported quarter and made up about 40% of year-end backlog.
Forgent is also taking market share. Grid revenues grew 69% against estimated market growth of 10%, and industrial and other revenues rose 11% against 8%. Vertical integration, customization and short lead times help it win orders. Continued share gains could keep growth going even if industry demand cools.
Profitability is improving alongside growth. Adjusted EBITDA rose 91% to $323 million in fiscal 2026, with the margin at 22.7%. For fiscal 2027, management guides to adjusted EBITDA of $575-$625 million, up 86% at the midpoint, and adjusted EPS of $1.26-$1.40, up 95%.
Cash flow and capacity should fund the next phase. Operating cash flow rose to $109 million from $45 million and is expected to top $300 million in fiscal 2027. A planned Tijuana facility should lift revenue capacity to about $5.8 billion.
Take a look at how Forgent’s EPS estimates have moved over the past 90 days.
Our Take: Forgent Has the Edge
Both stocks have strong cases, and Eaton remains a solid buy, backed by diversification and a deep data-center pipeline. But Forgent offers more upside. It is guiding to roughly 95% EPS growth in fiscal 2027 against about 12% for Eaton in 2026, and a $3 billion backlog already covers most of next year’s revenues. Forgent also sports a Zacks Rank #1 (Strong Buy), a notch above Eaton’s Zacks Rank #2 (Buy). Execution is the main risk, but with faster growth and clearer visibility, Forgent is the pick. You can see the complete list of today’s Zacks #1 Rank stocks here.